Industry News July – August 2007

UPM Raflatac Inaugurates New Terminal in MumbaiUPM Raflatac, one of the world’s leading manufacturers of paper-based and filmic self-adhesive labelstock, inaugurated a new slitting and distribution terminal at Turbe in Mumbai on the 31st of August 2007. The terminal is designed to deliver a more diverse product range by slitting and rewinding labelstock to specific customer widths and effecting despatches within 24 hours. This will substantially strengthen UPM Raflatac’s service levels and distribution to the burgeoning Indian market. According to Jussi Vanhanen, Senior Vice-President of UPM Raflatac Asia-Pacific, “The investment demonstrates UPM Raflatac’s long-term commitment to the Indian labelling market. We believe our customers will appreciate our local supply of high-quality filmic labelstock range as well as our renowned range of paper laminates. Most importantly, we intend to provide a superior service experience.” The production facilities at the terminal include one wide width high-speed duplex slitter-rewinder, one heavy duty wide width slitter-rewinder and one ‘doctor’ winder for recovering reels with winding defects like loose winding and telescoping. Input rolls of 1,000 mm. width can be slit to a minimum width of 80 mm. The terminal also has a large storage facility for wide input rolls as well as finished widths of labelstock.

UPM Raflatac is the Label Division of the UPM Group, which is a world leader in Paper and Forest Products. With a production capacity of 12.2 million MTPA, UPM is the world’s third largest paper-maker and is the world leader in magazine papers. UPM’s total sales in 2006 were Euro 10.02 billion generating an operating profit of Euro 536 million.

UPM Raflatac, which produces paper-based and filmic pressure-sensitive labelstock and is also the world leader in HF and UHF RFID tags and inlays, was created in January 2006 by the merger of their erstwhile Raflatac labelstock business and the RFID business of UPM Rafsec. They have 11 manufacturing plants in Finland, France, UK, Spain, Malaysia, China, South Africa, Australia and the USA. Their global sales in 2006 were about Euro 1 billion (US$ 1.3 billion).

UPM Raflatac have upped their investments in the Asia-Pacific region recently via new terminals at Auckland, New Zealand and Bangkok, Thailand and a new state-of-the-art pressure sensitive labelstock manufacturing facility at Changshu, China.

To mark the inauguration of the Mumbai terminal, UPM Raflatac also organised a half-day seminar where speakers included Heikki Pikkarainen – President and Nasuf Culha – Product Manager (Asia Pacific) from UPM in addition to Kannan Viswanathan – General Manager (Exports) of Hindustan Unilever, P.V. Narayanan of the SIES School of Packaging and Suhas Kulkarni of DuPont India. The seminar concluded with a question and answer session with a UPM panel comprising Pikkarainen, Jussi Vanhanen – Senior Vice President (Asia Pacific), Jouni Komulainen – Sales & Marketing Director (Asia) and Santosh Kumar – Country Manager (South Asia). On being asked whether they are considering setting up a basic labelstock manufacturing facility in India, Vanhanen said this would be justified only if there was sufficient ‘critical mass’, which was not the case right now; it could be looked into at the appropriate time.

According to our information, the UPM_Group is also looking at setting up a large paper mill in Western India.

HP Indigo’s Singapore Centre of Excellence The Centre forms part of their US$ 10 million investment during FY 2007 to upgrade infrastructure for promoting the HP Indigo business in Asia Pacific. Target market segments include label & packaging printers, commercial printers, photo service providers and direct mail houses.

The newly designed facility extends over 12, 200 square feet and is divided into 5 main sections: Commercial Printing, Photo Specialty, Direct Mail, HP Indigo Finishing Solutions and Label Converting & Specialty Printing. It features more than 20 solutions for a wide variety of applications. There are four dedicated training rooms where HP experts will provide training and practical demonstrations as well as testing on a wide range of digital printing solutions. HP are in the process of installing all their latest presses in these training rooms for training people on them. The centre also aims at facilitating collaboration between local and regional industry experts and third party solutions providers for developing solutions that are designed to meet the specific needs of the graphic arts industry in Asia-Pacific.

HP’s alliances with several channel partners offer a whole portfolio of end-to-end solutions to supplement their own products and connect seamlessly with existing traditional offset printing operations. Channel partners already on board include Heidelberg, Creo, Screen, Agfa, Esko Artwork and Press–sense for pre-press and workflow solutions, GMG for colour management and proofing, Avery Dennison, Yenom, UPM Raflatac, Michelman, Hanita Coatings, Fedrigoni Group and Hahnemuhle for substrates and GBC, Unibind, Duplo, Horizon, Hunkeler, Morgana and AB Graphic International for finishing solutions. They have also reinforced their financial solutions arm. Special software has been developed for individual printers to work out their own break-even cost levels for digital printing as compared to offset printing for a wide variety of substrates and print jobs.

Presses installed at the Centre include the HP Indigo 5500, 3500, ws4500 and s2000. Other facilities include the IMS ink mixing system that creates special or corporate colours from a set of basic inks to meet customers’ specific requirements of spot colours and HP Indigo UV Coaters (glossy, matte and satin protective and decorative finishes) for both reel and sheet inputs. Also on display are systems for personalisation/customisation of print designs, printing of variable data, lenticular & 3D effects and all kinds of finishing options.

Also on display is HP’s new Indichrome Plus system, a seven-colour Pantone simulation using CMYK plus orange, violet and green; this gives a much wider range of Pantone shades with much better reproduction of multi-colour designs enabling transfer of jobs from conventional print processes to digital printing.

The Centre is an outstanding facility – well laid out, state-of-the-art, comprehensive and bright and cheerful. It is well worth visiting for anybody who is either already in the digital printing business or contemplating it.

Esko acquires Artwork Systems The three principal shareholders of ARWORK SYSTEMS (2006 revenues of EUR 46.48 million) have agreed to sell their entire holdings, representing a 76.69 per cent majority stake, to ESKO (2006 revenues of EUR 127 million, EBITDA EUR 13.6 million). The resulting consolidated entity will considerably strengthen the market leadership of both companies in packaging and commercial printing pre-production products and services with estimated 2007 revenues of over EUR 180 million and a combined workforce of almost 1,000 professionals. The Esko group is controlled by the Danish private equity fund Axcel.

The purchase price per share is EUR 11.50 in cash, which puts the total enterprise value of ARTWORK SYSTEMS at EUR 196 million. At a later stage, ESKO will launch a mandatory public offer for all remaining shares and outstanding warrants of ARTWORK SYSTEMS at a price of EUR 11.50 per share.

This strategic alliance will create a formidable software giant with complementary strengths in all segments of packaging and commercial printing pre-production products and sales and service support. There will also be consolidation of their global customer bases. The merged entity has been named Esko Artwork.

Carsten Knudsen, presently the CEO of Esko-Graphics, will become the new CEO of the combined operation while Guido Van der Schueren, currently the Chairman of Artwork Systems, will become the Chief Commercial Officer spearheading the integrated marketing and sales operations. Together, they will form the Executive Management Board and both will serve as Executive Directors on the Supervisory Board of Esko. Van de Schueren will also reinvest his takings to become a significant shareholder of the combined entity.

Esko’s key product lines include the Esko Software Suite for graphic and structural design, pre-production and project management for the entire supply chain, Esko CDI computer-to-plate systems for flexo plates and sleeves and Esko Kongsberg cutting and creasing tables for sample making and short-run production for packagingand signage/POP applications. Artwork Systems develops complete and integrated software solutions for multi-colour printing or pre-press like Enfocus and Artwork Systems CAD Solutions.

Akzo Nobel to take over ICI, and to sell off adhesives division to HenkelAkzo Nobel NV have agreed to buy out Imperial Chemical Industries PLC for 670 pence in cash per ICI share. The deal is valued at about GBP 8 billion and represents a 22 per cent premium on the closing price of ICI shares as on the 15th of June 2007.

Akzo Nobel have also signed an agreement with Henkel to sell all the assets of ICI’s Adhesives division and Electronics Materials Division (which together make up ICI’s National Starch business) for GBP 2.7 billion (Euro 4 billion) in cash.

ICI are one of the best known chemicals conglomerates and are famous for having invented polyethylene in 1933.

For Henkel, the acquisition will further strengthen their position as the world’s leading adhesives company, especially in the industrial segment. National Starch realised sales of about GBP 1.26 billion (Euro 1.85 billion) in 2006. The combined revenues of Henkel and National Starch for the Adhesives sector will be about Euro 7.3 billion and generate cost and revenue synergies to the extent of Euro 240 to 260 million per year.

Rollatainers Limited turns sick Rollatainers had pioneered the concept of the Cekatainer lined carton packaging systems in India with a Swedish collaboration way back in the early 1970`s.

The fortunes of the company fluctuated, and for many years now, it has struggled to keep afloat. The company has been notified under Bureau of Industrial & Financial Restructuring (BIFR) as a “sick industrial company” on 27.7.06.

The website of the Bombay Stock Exchange shows that at a Board Meeting on 20.5.06, under its Corporate Debt Restructuring system, the company has allotted 9,000,000 Optionally Fully Convertible Debentures of INR 10/- each to WLD Investments Pvt. Ltd. As the paid up capital of Rollatainers is INR.100 million, this infusion, when “converted” would amount to a major shareholding of company. Of course, it remains to be seen if the capital base of the company itself will be increased to determine the extent of the stake of WLD. WLD is associated with the promoters of Amtek India Ltd., a reputed manufacturer of auto components managed by Mr. Arvind Dham.

The board of directors was to meet on 23.8.07 to consider a change in management as provided in the rehabilitation scheme sanctioned by BIFR on 15.5.07. We expect the new owners to formally take over the management of the company in the near future.

This will certainly bring a welcome breath of fresh air, enthusiasm and motivation to a once flourishing company.

The company is also going ahead with its plans to open a new factory in Dharuhera, Haryana, possibly towards the end of this year.

We expect to bring you more relevant information on this company in the near future.

Ess Dee and Essel Propack in the race for Alcan PackagingIndian packaging majors Ess Dee Aluminium and Essel Propack are reportedly both bidding for Alcan’s Packaging division. When Rio the Beauty Packaging bussiness of Tinto acquired Alcan for US$ 38 billion earlier this year, they had made it clear that Alcan’s Packaging division would be sold off as it did not fit in with their core objectives of focussing on the metals and mining business. Since then, both Bemis and Sealed Air have been touted as potential buyers but, according to our information, they have dropped out as the asking price is considered too high. Alcan’s Beauty bussiness Packaging division reported sales of about US$ 800 million in 2006 from operations in 13 countries 13 per cent of Alcan Packaging sales ofUS$ 6 billion. Alcan Packaging are in the process of commissioning a greenfield US$ 1 million flexible packaging plant at Haridwar in North India.

Ess Dee Aluminium, which manufactures aluminium foils and foil laminates, reported sales of INR 1.7 billion (US$ 42.5 million) and net profit of INR 370 million (US$ 9.25 million) on an equity base of INR 254 million (US$ 6.35 million) in FY 2006-07. They have reserves worth INR 1.97 billion (US$ 492.5 million) and the acquisition would give them an enormous boost in operations. Ess Dee are also reported to be negotiating the take-over of India Foils, the pioneers in aluminium foils and foil laminates in India, for around INR 2.5 to 3 billion.

Essel Propack are the world’s largest manufacturers of multilayer tubes. Last year they reported consolidated group turnover of INR 10 billion (US$ 250 million) and profits of INR 985 million (US$ 24.63 million). The other company in the running for Alcan’s Packaging division is Amcor. The deal being negotiated is reported to be around US$ 1 billion for the Beauty Packaging bussiness.

Janoschka installs Cellaxy in Munich With 26 production sites in ten countries Janoschka are one of the world’s biggest service providers for packaging with a full range of options for gravure cylinder production. For their Munich based Fentsch Packaging Solutions GmbH, member of janoschkagroup de, plant Janoschka decided to install the Cellaxy laser direct engraving technology from Hell Gravure. The machine was installed and successfully started up in September.

Cylinders have already been manufactured using the new Cellaxy laser process in which a cylinder coated with a chromium layer is imaged directly using a high-performance laser. A resolution of 2540dpi makes it possible to create ultrafine details for linecuts and small text fonts. This process is thus a real alternative to existing etching procedures.

The decision by Janoschka once again underlines the company’s dedication to the most modern technology. Whatever process fulfills customer requirements is used in the janoschkagroup.

India Label Show sells out The Tarsus Group, the organisers of the Labelexpo group of events have bought over Label Expositions Private Limited, the Mumbai-based organisers of the India Label Show. The last edition of this show was held in December 2006 and occupied 3,600 square meters of net space. The next edition is scheduled to be held in December 2008. According to Douglas Emslie, Group Managing Director of Tarsus, “This acquisition is another step in our strategy of increasing Tarsus’s exposure to fast growing emerging markets and substantially completes our geographical representation serving the global labels industry. The Indian label market is growing at approximately18 per cent per annum and is forecast to triple in size over the next 5 years with the rapid growth of local supermarkets and the entry into India of leading international chains such as Walmart and Tesco.”

Easter egg carton made from one piece of cartonboard In the Easter Egg Carton Pack category, sponsored by Marks & Spencer and cartonboard producer Korsnäs, this contribution – described as having great shelf impact, funny, creative, simple, displaying the product and easy to manufacture – won not only the Gold Star but was also awarded Best in Show and the Sponsors’ Award.

M&S has a very tough packaging policy and is actively working with environmental issues at the same time as they are marketing their products with packaging that sells. As sponsors in Student Starpack Award they are, together with Korsnäs, encouraging creative packaging solutions in cartonboard which reflect their aspiration for design. The aim in the brief was to reduce the amount of plastic inserts and create innovative shapes and forms using only Korsnäs board to create the supporting mechanism. This year 249 students from 25 universities were competing in different categories.

An increasing number of foreign universities have joined the competition and this year Lahti Institute of Design in Finland was the university that received most awards, whereof Monika Osinska got three awards for her Easter Egg. Monika is Polish, studying in Finland and impressed the jury in the UK-competition with her brilliant, simple and eye-catching solution.

Ampac buys Floeter Packaging Group Ampac Packaging, the world’s largest manufacturer of security and shopping bag products, have acquired the Floeter Flexible Packaging Group, a leading manufacturer of stand-up pouches and retort pouches with 2 manufacturing plants in Eberdingen and Leipzig in Germany and one each in Chicago and Manesar near New Delhi. Floeter generates sales of over Euro 23 million and produces 1.3 billion hot-fill retort pouches in addition to pouches and bags for various specialised applications.

Ampac is a diversified flexible packaging group with annual sales of over US$ 250 million. Earlier this year, they had acquired Sealed Air Corporation’s Trigon Security Products business in North America and Europe.

Bostik buys DuPont’s adhesive business Adhesives major Bostik, a subsidiary of the Total group of France, has acquired the adhesives business of DuPont that operates under the Herberts brand with its plant located at Wuppertal in Germany. It is a leader in flexible packaging adhesives with an annual turnover of Euro 22 million.

Mark Andy ties up with Indian firm Mark Andy, a leading manufacturer of high-end label presses has signed a contract with Global, a multinational engineering and software company based in Bangalore, India to build up a special engineering team to design and develop engineering and software solutions for emerging markets in India and Southeast Asia. The team will work closely with Flexo Image Graphics, Mark Andy’s distributors in this region, to expand product line offerings and equipment capabilities.

Label firms generate lowest profit margins In its Printing For Profit 2007 report, the British Printing Industries Federation (BPIF) has reported that the label sector generates the lowest profit margins in the entire printing industry. Whereas the national average was 9.9 per cent and the carton and flexible packaging sector generated 9.63 per cent, the operating profit to sales ratio for the label sector was only 6.7 per cent. However, the carton and flexible packaging sectors performed better than the national average on productivity ratios (sales per head, value of output per head).

Suppliers not using RFID to be penalised Germany-based Metro, the world’s fourth largest retail chain (2005 revenues of Euro 55.7 billion), have decided to crack the whip in their plans to make their supply chain more efficient through the use of RFID technology. They have announced that those suppliers who decide not to ship pallets with RFID tags will be levied a financial penalty. Many suppliers are reluctant to use RFID tags and systems due to the high prices of tags, unattractive ROI for these systems and privacy concerns at the consumer level. Metro’s RFID rollout involves 180 locations in Germany, including the stores and distribution centres that service them. So far, only about 70 suppliers (including large corporations like Procter & Gamble) are supplying RFID tagged pallets to Metro.